Calculate rate of return, Suppose six months ago the US

Calculate rate of return

Reference no: EM1359698

Assume six months ago the US Treasury yield curve was flat at a rate of 4% per year (assume semi-annual coupon payments and semi-annual compounding) and you bought a 30-year US Treasury bond. Today it is flat at a rate of 5% per year. What rate of return did you earn on your initial investment:
a. if the bond was a 4% coupon bond?
b. if the bond was a zero coupon bond?

Reference no: EM1359698

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